The investment arm of New York-based property services firm Cushman & Wakefield has teamed up with Scottish Widows Investment Partnership, the investment platform of UK pensions and insurance firm Scottish Widows, to launch a European retail real estate fund.
The partners are aiming to attract €250 million in equity for the vehicle, called PURetail, from institutional investors in Europe and the UK and hope to complete a first closing in the first quarter of next year. They will seek to borrow debt for the fund at a loan to value ratio of 50 percent.
The fund, which is still subject to regulatory approval, is expected to invest in city centre assets across Europe from the start of next year after when it will invest for a further three years.
In an announcement by the partners, they said: “The fund will provide investors with diversified exposure to the urban retail sector, which has traditionally been under represented in their sector allocation, and represents a less volatile asset class”
Robert Matthews, head of international property and strategy, at SWIP said: “A growing focus on in-town shopping has increased the attractiveness of major European city centres for retailers. Investors recognise the attractiveness of the sector but historically inner city retail has been a difficult market to access, with the need for strong local market contacts to source and manage stock being essential. As a result, many investors are underweight in this element of the retail sector. With its impressive local knowledge and reach, Cushman & Wakefield Investors was SWIP’s natural partner for this fund.”
David Rendall, European chief executive officer at Cushman & Wakefield Investors said: “Demographic change is resulting in increased population density and driving economic growth in inner city areas, reinforcing the attractiveness of town centres to retailers. Our urban retail property fund will have a differentiated investment strategy, buying well located retail property in supply-constrained cities and town centres, identified by the combined research capabilities of our respective organisations.”